I will be honest, I have not stayed out of the market and in fact have traded stocks at a pace about double what I have done in the previous 4 or 5 years.  But I have done so with less money and with substantially shorter-term  trades.  That is what caution and the high volatility of the past two years have dictated (at least from my view).

But hold on here, folks!  The wait for smoke to start pouring out of American factories is about to end.  (please take this metaphorically because lots of growth will come from small business and service industries)

Anywho, starting a few weeks ago I began to take a different tack as the view from the bottom had changed.  I have been looking for investments and not trades.  That means that long-term buys appeal more than short term trading.  I did so very cautiously and with a bit of trepidation. A lot of worry still wracked my fragile mind.

Then as the news piled up last week (I will give you the headlines soon) I realized that key economic indicators were finally confirming my earlier impression.  Now I am looking at investments to hold on to for at least six months and perhaps even a year or more.  Things that have real growth potential in an expanding economy, things that provide a steady income stream via historically high dividends that can only grow if the corner has  really been turned.

Why am I telling you this.

Its simple.

For the first time I don’t believe we will have a “W” recession — the kind where another big downturn would be imminent any day.  For the first time I really believe that a “V” recession is what we have just gone through and that the right-hand side of that “V” is going to be steep and long.

That means companies will start growing, earnings will increase (a lot really since most companies are ‘lean and mean’ right now), tax revenues will begin to increase (so the government can start paying off our incredibly high national debt), and unemployment will start to shrink (not as fast unless Obama really takes action as promised recently).  More importantly, because the FED is keeping interest rates low (no quick end to that policy) and hundreds of billions of Obama’s stimulus plan will start to hit main street this year, growth could be pretty phenomenal.

Now, let me give you a few of the headlines from last week as promised:

“Exports up for 6th straight month, boost recovery” — a weak dollar has helped here

“American’s net worth up for 2nd straight quarter” — think both home values and investment portfolios

“Leading indicators rise for the 8th straight month” — money supply, stock prices, building permits, improving labor markets all helped here

“Americans most pessimistic they’ve been since January”  — this is a contra indicator (from CNBC) and and is mostly reflective of political issues rather than raw economic ones

The bottom line is that I have changed my view on the current recession.

It’s over folks!!

And it is not coming back anytime soon.  It was painful, yes, but the gain from the pain is just ahead.

The next year or so of economic and investment  (primarily stocks) growth is going to be really good — probably at least 3% GDP growth in 2010 and the stock markers should be up steeply as well (but not straight up)  I wouldn’t be surprised with the  Dow at 13-14,000 by next year end.

I’m feeling real good about the near term future ( I always feel good about the long-term future) and I think you should too.

The old caveat on unemployment is always out there but it is a 6-12 month lagging indicator and yet I expect it will begin to improve almost from the first months of 2010. So I’m not going to beat that dead horse anymore (unless Obama and the dems fail to stimulate here as they have recently promised — and I will be watching President Obama).

Whew!  Thanks heaven (and I really mean that).

The recession is over.

Good times are just ahead.

I’m counting on it!

Thanks for the photo from flickr to ahbijeet.rane

Now, we are NOT in another great depression (yet) but it is fair to call our current circumstances a great recession (as many already have).

Sure companies are doing better because they have cut costs dramatically (mainly by letting our neighbors and friends — and some of you? — lose jobs).  But can they increase sales?  Can they grow once the stimulus, bailout and clunker programs end?

Yes, that is the big question.  What will happen when all the government money runs out?  I don’t want to think about it either, but someone has to.

Only a few months ago, President Obama  predicted a budget deficit increase of 7 trillion $$.  Yesterday the White House bumped it a little (their words?).  Up nearly one third (2 trillion more $$) to 9 trillion $$.  Yikes what will this burgeoning Socialist administration accomplish in 4 years?  THAT is something I really don’t want to think about . . . yet someone must.

Add in the cost of healthcare reform and cap and trade carbon costs and anything else the uncontrolled Democrats want and we could be bankrupt by the end of Obama’s first term.

I liked him at first (thought I remind you that I did NOT vote for him — I currently never vote for incumbents or anyone that will give a legislative and Executive majority to any party — and by the way, you should take the same avenue for improving our nation’s governance).  But, now I am not so sure.  He is a celebrity President and hardly ever talks without a teleprompter and that worries me.  He may not be as smart or sharp as his friends in the liberal media portray.  Nothing like great potential to ruin one’s real achievements!

Remember, I have made it clear I am for change:  health care needs it, energy policy needs it, politics need it, and much more too.  But not too much at once and do it with open and frank debate not acrimonious ideological dissension.

Back to the economy.

The Commerce Department gave us some new data  today.  Here is some of it for for you to digest and I suggest you take Lomotil first.

We now have four straight quarters of GDP decline behind us.  The last two quarter declines of 6.4% and 1%  represent the biggest back-to-back declines in more than fifty years!  Further these four straight quarterly declines represent the only time this has occurred since 1947!!

Also the current recession is the longest and the most severe (in terms of GDP decline) since WWII.

Further we are still losing jobs at an alarming (though improved) rate.  We actually need to ‘create’ about 150,000 jobs every month just to keep up with the growth in the work force (due to population and immigration).  Yet we are losing over 500,000 jobs a week (that’s new unemployment claims and must be offset with new hires to get the actual damage)!

Dang, this is worrisome.  Couple it with that fact that in the not so distant future our National Debt will EXCEED total GDP (Obama’s 9 trillion $$ remember) and you have a disaster in the ‘closet.’  How the heck is the government even going to make debt paymenrts?  You know, like most of us have to on our mortgages.

Is the U.S. debt headed for a ’subprime’ rating because income is going to be so much smaller that just even the debt (forget the principal amount)?  Think about what happened to a big part of the real-estate market in the U.S. in the last 2-3 years.  Does the comparison concern you?

There is much that we can do to mitigate the looming disaster, but of course that must wait until Obama returns from Martha’s Vineyard and Congress returns from their embarrassing and revelatory vacations of townhall meetings and expert avoidance of answering any real questions.

The question now is:  will they do anything substantive when they return.  Anything to brighten the future of our children and grand-children?  History does not give us much hope.

Confused?  Don’t be.  Things aren’t nearly as rosy as the administration and the Democrats (and much of the media) are telling you.

Be prepared for further bad news and decline.  What’s the risk in that?  Nothing . . . it is the smart thing to do.

thanks to gagilas for the flickr photo

To be honest, I was surprised at the unemployment number . . . shocked would be more like it.  Seems all the news was good.  Only 247,000 jobs were lost in July–I was expecting 400,000.  More importantly the unemployment rate went down for the first time in 15 months (from 9.5% to 9.4%).  Even the average hours worked and average pay went up a bit.

So, the Prez. this morning told us the recession is ending (at least he thinks it is soon).  You don’t have to believe him but the numbers don’t lie (oh wait, who puts the numbers together?). 

Frankly I was not expecting this for a few more months.  But, you know what?  The stock market is a leading economic indicator of about 6 months (some think longer) and it turned up with a vengeance in mid-March or roughly 5 months ago. Who’da man?  Obama-man!

The stock markets just keep going up, even with occasional bad news.  This sure looks like a ‘V’ shaped recovery to me.  I’m kicking myself for selling some of my investments in April because I thought this was going to be a “W’ recovery and I could buy them back cheaper (big mistake).  If I had held on to them until yesterday I could have bought a new car even without the taxpayers $4,500 clunker bonus (a KIA anyway on a five year contract at 4%).

I have revised my thoughts on the subject and am now quite comfortable with GDP growth in the third quarter (July, August, September).  In fact, as corporations see the changes coming  they are going to start planning for growth and it is possible, remote, that we just might, maybe, not reach 10% unemployment this year.  That would be great news, like Freddie Mac (the government sponsored mortgage backer) declaring yesterday they had a PROFIT for the last quarter.

Still, telling the 14,000,000 or so folks that want jobs and can’t find them that the recession is just about over is little consolation.  They want jobs YESTERDAY!

So, Mr. President.  Put some real effort into employment until it works and then most everybody will be happy (well, excepting right-wing radicals like Glen Beck and Sarah Palin).  Get the unemployment numbers back to 5 1/2% within two years and I might even vote for you next time around (wait, I’ve sworn on penalty of public service, cleaning freeway right-of-ways, that I will NOT vote for any incumbent — think term limits).

Thank heavens for the stimulus package . . . now spend what is left of it to create jobs and modernize our infrastructure.  You’d better if you even want to dream about getting my vote.

I wish I felt confident enough to put some $$$ into the market and ride this ‘bull’ for a while– but I don’t.  To many things could go wrong (like America’s growing debt and the possibility of mortgage shattering inflation–just to name two).

thanks to flickr’s zhurnaly for the photo

Don’t believe it.

It is happening NOW!? In earlier posts I stuck out my neck and predicted an early?recovery of the markets (as in stock).? That seemed pretty aggressive a month or two ago.? No longer.? Markets are leading indicators.? A five week run on the positive side seemed unthinkable six weeks ago.? A 25% gain in that period was dream-stuff.? Now it is real and building.? A further 25% will put the Dow Industrials at the 10,000 level I wrote about as the target for June.?

Not so unthinkable is it?

Why is this all happening?? Is it the incredible stimulus and bailouts invested by our government?? Not really.? Only a tiny (and I mean a miniscule tiny here) of those have had time to take affect.? Capitalism works, without all the outside intervention, and we are watching it go on its merry way.

The markets are like a pendulum, and a wild one at that.? Almost always we can expect the market pendulum to swing (way) too far one way or the other.? This is caused by the herd mentality of our populace, enhance by far-out predicitions from the media.? This pendulum effect is far worse today than fifty years ago.? Blame that on the media, the internet, the Congress, the Fed (Reserve), the Treasury (Department), your local newspapers (if you have any left).

I remember once in college, I got to a class a little early and a couple of students were waiting outside the door.? I joined them, not even thinking about it.? After ten minutes the entire class was waiting.? Pretty soon the Professor arrived and started waiting too.? After ten more minutes someone thought to open the door and look inside.? The room was empty.? What a bunch of morons! And sheep.? These are the same people we are ‘following’ today.

Jeez Louise, how I wish we all thunk (plural of think in my odd universe) for ourselves.?That would be?cool, fool.

Yet, economically the tide is turning, the pendulum has started the move back, and it will pick up speed.? The new administration has stopped ‘nay saying’ and started to be more encouraging . . . on all fronts.? Confidence in building.? Spending will pick up and the economy will get back on track.? A whole bunch of American sheep will be piling on soon (most of them too late to enjoy the full benefits of the current upward?move).?

Follow the ‘crowd thoery’ and watch with wonder.? I won’t trouble you with analysis of all the leading indicators but they are swinging the right way too.? This I will reconfirm: Dow 10,000 by June.? Positive GDP growth in the third quarter for sure (I actually think we can see positive GDP in this, the second, qaurter).

The recovery has started.? The stimulus helped, primarily because it gave people hope and then confidence.? Did we need it?? Probably (but not for the reasons you think).? Do we need all the ‘rest’ of it now?? Probably not (let the free markets take over).?

It will take two years or so for all the stimulus and bailouts to take affect.? We will be far into the next expansion by then and frankly all that extra spending (investing) will be wasted.

I wish we could pull a bunch of the spending off the table.? Possible, and not likely.??When has Congress ever made a timely AND?right decision?? I read about one on December 8, 1941 . . . haven’t heard of one since.? Need I remind you that we need TERM LIMITS!? That would be the best change of all.

Stimulus?? Bailouts?? Tax cuts?? Deficit spending?? Fiscal and monetary action?? That’s the old news.? The new news is refininancing at much lower?rates, buying homes at 75% of their value from two years ago (and at rates as low as 4.5% for 30 years),?people saving for rainy days (and hopefully putting some of that savings into good equities?that will help protect against the coming inflation (yikes!).?On top of all that we stood up to the pirates and pulled a John Wayne on them!? Way to go BHO.? So!

Doctor, the patient is alive and well, just give him a few months to start running again.?

I’m fully invested and I don’t care about the ups and downs the market will experience in the next year or so.? But, I am sure it will be a good 50% or more higher in a year than it is right now.? I’ll hang on for that gain and count myself lucky to have had the opportunity.? By the way I bought some oil trackers and so as oil goes up (as it will) my profits will more than pay for the extra cost of gas.

This next year is going to be fun, exciting and provide a myriad of opportunities to the confident and brave.?

Cautionary note:? by 2010 inflation could be a bugaboo, by 2011 it will be awful (double digits is possible).? Then watch out for a whole new set of problems.

Ain’t life fun?

Thanks for the flick photo to army.mil